ABC Analysis Using SAP R3

ABC Analysis is a key concept by which large quantities of organizational data can be classified depending upon its importance. Such data can relate to material or processes. ABC analysis is mostly associated with inventoy ABC analysis. However, in SAP the ABC analysis functionality can not only be used for inventory analysis, but also for other processes such as S & D, plant maintenance, production, purchasing etc.

ABC analysis is available in SAP, however, companies need to follow a certain set of steps through which they can perform ABC analysis. Listed below are the steps required for ABC analysis in SAP.

1. ABC Analysis Goal - Before doing ABC analysis, companies need to know what the goal of such ABC analysis will be, goal setting is the first step in ABC analysis.

2. Analysis Area - Determining the area to be analyzed is the next step in the process. Companies need to identify thearea for which ABC analysis will be done such as inventory, purchasing, plant maintenance etc.

3. Data Basis - The third step is calculation of the data basis. This ensures consistency of the data to be analyzed. Data basis may consist of characteristics such as inventory number, key figure, consumption, production, spending on plant maintenance etc.

4. ABC Strategy - In this step, the ABC strategy and class boundaries are defined based on which the actual analysis would be done. In the ABC strategy, segment sizes need to be defined for example inventory value A category - 70%, B category - 20%, and C category - 10%.

5. Assigning Classes - This is last step in which one defines the class limits and assigns such classes. Note that one can define both the upper and lower limits of the classes. When such class assignment is complete, SAP calculates rank or material as a total percentage of total inventory value.